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You Lost the Race, But You May Have Hit the Lottery: NY Road Runners’ Illegal Lottery Lawsuit

What is it with New York these days; it’s a boon for promotion lawyers. First, the Attorney General says daily fantasy sports are illegal gambling and now disgruntled marathoners are claiming that the organizers of the NYC Marathon run an illegal lottery. On January 21, 2016, two guys from Utah filed a lawsuit in federal court in New York for a class action against the New York Road Runners, Inc. alleging that from 2010-2015 the Road Roaders ran an illegal lottery because some potential entrants had to pay an $11 processing fee to be entered into a drawing to compete in the Marathon. (See Complaint at http://thetmca.com/files/2016/01/16-cv-00450-Document-1-3.pdf )

For those of us without “26.2” stickers in our car windows, the runners tell us that because there are only a limited number of spots, people can enter the Marathon either by donating time or money to a charity, winning a qualifying race, or by the “Lottery”. The odds of getting picked in 2015 were less than 1:5. Unfortunately, Messrs. Konopa and Clark (the plaintiffs) didn’t win. So, instead of doing what most people would do – train harder – they did what makes this country of ours so litigious great, they sued.

The runners may be on pace to cross the finish line with a potential prize pool of over $10 million. The elements of an illegal lottery are prize, chance and consideration. The runners seem to have passed the qualifying heat: you get a spot in the Marathon if you are selected in a drawing provided you pay $11 to enter the drawing. But does the claim have legs?

We’ve yet to hear the response from the Road Runners, but they may claim, among probably many other things, that the $11 “processing fee” was not consideration to enter, or that they are exempt because they are a non-profit, or that there are alternative free methods of entry.

The “processing fee” argument has been made before. The MLB and the NCAA have had ticket lottery programs which involved a non-refundable processing fee. The NCAA discontinued the practice in 2010 after angry fans filed lawsuits, but it is not believed that any lawsuit has been filed over the MLB program. The “non-profit” argument is possible, since charities can generally hold raffles where an entry fee is required but there are many specific restrictions.

Maybe the other methods of entry into the Marathon are free. The Road Runners guarantee entry to anyone who does either of their “9+1” or “9+$1k” programs, but both of these programs require that you compete in 9 races, and either volunteer or donate at a Road Runners event. These methods may look “free”, but legal consideration under lottery laws could include situations where a significant amount of effort is required even though no money is paid. Courts have blessed watching a T.V. program and filling out a survey, but running 9 mini-marathons sounds a bit more taxing than sitting on your couch.

We don’t know who will cross the finish line first in this lawsuit, but the issues are interesting and it could end up having a significant impact on how public-participating sporting events are run. (Get it? “run”)

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